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Mr. James Gray (North Wiltshire): Will the Minister explain why that relief is given to stud farms, but not to farmers who diversify into breeding horses on ordinary agricultural farms?

Ms Armstrong: That is one of the decisions taken when the legislation on stud farms was introduced. The Bill goes some way towards dealing with that anomaly. I am sure that the hon. Gentleman will say that it does not go far enough, but if he bears with me I shall explain how new stud farms will fare following this Bill.

Because of the existing concession, new stud farms will not receive the mandatory farm diversification relief. However, we shall increase the stud farm concession to a £3,000 reduction in rateable value, worth £1,290 in 2001-02. That is the same as the maximum mandatory relief under the farm diversification scheme. Thus so long as it is on farm premises, either a stud farm or a horse enterprise of the sort that the hon. Gentleman mentioned will be eligible for the same amount of mandatory relief.

Clauses 3 and 4 of the Bill relate to village shops. Local shops provide an essential service for rural communities. In 1998, we implemented the village shop rate relief scheme, which provides 50 per cent. mandatory rate relief to small general stores and post offices where they are the only such outlets in villages with populations below 3,000. In addition, local authorities can give discretionary relief of up to 100 per cent. to those and other small businesses.

In last year's local government finance Green Paper, we consulted on a proposal to extend the mandatory rate relief to other food shops, pubs and petrol stations. Earlier this month, we extended mandatory rate relief to the sole pub or petrol station in small villages, with effect from 5 April 2001.

The Bill will do the same for small food shops in those villages. At the moment, where there is one general store selling food it gets mandatory rate relief, but where there are two, for example a grocer and a butcher, neither is eligible for mandatory relief. We recognise that separate butchers, bakers and grocers provide the same service to a village as a general store that provides a wider range of foods. I am sure that those of us who live in and represent rural areas want to ensure that local butchers, bakers and grocers can survive. The Bill extends mandatory relief to all village shops that mainly sell food for human consumption. Shops that sell other goods or services, secondary to their food sales, will also be eligible for the mandatory relief.

Relief will be given on the same terms as the existing scheme for general stores and post offices. It will be limited to properties with a rateable value of less than

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£6,000. Local authorities will have the discretion to top up the 50 per cent. mandatory relief to 100 per cent. where they feel that it is needed. They will also retain the discretion to give rate relief to any village business with a rateable value up to £12,000.

Those measures should not be seen in isolation. We are implementing other rural White Paper measures to help village shops. For instance, the new community service fund will mean that the Countryside Agency can offer more support to keep village shops viable. It will also help communities to re-establish a shop where it has closed.

I should make it clear that the Bill amends the main rating legislation, the Local Government Finance Act 1988. It therefore extends to England and Wales. The new order-making powers will be exercisable in Wales by the National Assembly, including setting rateable value thresholds, commencement and possible extension of the farm diversification scheme.

Mr. Gray: I am grateful to the Minister for giving way again. Before she winds up her speech, could she focus her mind on the word "hereditaments" in the title of the Bill? Am I right in understanding that that means any property that can be inherited, and therefore any property that is owned, which would exclude, for example, farms that convert a building and rent it out? If that is the case, does the hon. Lady intend the word to mean corporeal hereditaments or incorporeal hereditaments?

Ms Armstrong: I can confirm that the Bill will apply to any premises which used to be used for farming and which will now be used for other purposes, whether the premises are rented out; whether the farmer still lives on and runs the farm but rents out a part of it to someone else; whether the farmer himself uses the premises; and whether the farmer is a tenant or an owner. I hope that that answers the hon. Gentleman's question.

I shall deal with the issue of the 183 days. We wanted to ensure that the premises were in agricultural use for at least half the preceding year, but we did not want to exclude premises that were not used for agriculture, seasonally, for a smaller part of the year. That is why the period of 183 days was chosen.

Mr. Evans: The Minister said that it would be up to the National Assembly to bring the order into play in Wales. Will she tell the House what assessment she has made of the cost to the Assembly of implementing the provisions? Will she give the House an assurance that that money will be forthcoming from the Exchequer to support the National Assembly?

Ms Armstrong: I have already explained that it is very difficult to estimate those costs. It will be up to the National Assembly to budget the amount that it will allow for this within its overall budget. For example, the Assembly has decided on totally different amounts for the rate relief that we announced some weeks ago, and it has done that within its budget. It is up to the Assembly to do that. That is why it has set an overall limit on the amount that it is prepared to give in hardship relief. My measures for England do not set such an overall limit. That is one reason why we went for a lower rateable value than

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Wales. It is up to each of the Administrations to set those amounts for themselves within their overall budgets. I am sure that the hon. Gentleman does not want me to go into the intricacies of how the Barnett formula allocates money to Wales as opposed to England and Scotland.

Mr. David Heath: I want to return the right hon. Lady to the point that I raised earlier, because I still have not had an answer to my question. When the order was introduced to extend relief to public houses and petrol filling stations, it was done by an amendment, by order, to section 43(6A) and (6B) of the Local Government Finance Act 1988. The right hon. Lady is now saying that she needs to amend subsection (6C), to apply the provision to qualifying food stores. She defines those stores separately despite the fact that qualifying general stores are already covered by the Act. Will she explain the legal necessity for that? It is not apparent to me or, I suspect, to a great number of other people.

Ms Armstrong: It was not very apparent to me, either. However, as a Minister, if one does not take the advice of the lawyers and parliamentary counsel at this stage, one can end up in deep trouble. Whatever the means of achieving this, we wanted to make sure that we could do so without being challenged. This was the most effective way of ensuring that we would not be challenged. The legal advice was very clear that the provisions relating to shops had to be achieved through primary legislation and that we could not achieve that in the same way as we did with pubs and garages--so it may be mystifying to us all. Lawyers will always have their day. My main concern is that rural communities can benefit from the measures. By whatever means, therefore, I was prepared to do the additional work to ensure that we could introduce the Bill without concern that the provisions would be challenged.

Mr. Curry: Are small firms of rural lawyers eligible for rate relief?

Ms Armstrong: I think that they might have great difficulty in demonstrating that they were undergoing hardship at the moment.

To sum up, the two measures in the Bill will provide welcome financial assistance to rural businesses. The Bill will help to reduce costs for farmers who wish to diversify into non-agricultural activities. It will also provide support to village food shops. It will be helpful as part--I recognise that it will be only part--of the long-term recovery from the problems caused by foot and mouth disease. I commend the Bill to the House.

4.20 pm

Mr. Damian Green (Ashford): At the beginning of the Minister's illuminating and helpful speech, she said that the Bill was important. She was right, and it is therefore right to put on record the fact that precisely two Labour Back Benchers were present to listen to the whole speech--less than 0.5 per cent. of the parliamentary Labour party. One of those two hon. Members was elected a Conservative--I welcome the hon. Member for Leominster (Mr. Temple-Morris) to his place. That is a stark illustration of the Government's commitment to the countryside in the middle of the current crisis.

Mrs. Dunwoody: The hon. Gentleman might be using an interesting form of arithmetic that I have not

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discovered, but at least three or four Labour Members were present. Some of us make up for more than one person.

Mr. Green: I was going to make the point that although the quantity of Government Back Benchers was lamentable, the quality was extremely high. The hon. Lady makes a significant contribution to the quality. I emphasised that only two Labour Members were present throughout the Minister's opening speech: the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) and the hon. Member for Leominster.

The Minister introduces the Bill at a time when the economic condition of the British countryside is unprecedentedly bleak. We are considering a few small but welcome measures to help farmers and other rural businesses. Although we welcome the Government's gesture, it is vital to put it in perspective. The crisis threatens to engulf not only agriculture but many other sectors of rural life in Britain today.

Hon. Members know from the Minister's speech that the provisions arise from the crisis that hit agriculture before the devastating blow of foot and mouth. A little more than a year ago, the Prime Minister presented an action plan for farming, to which the right hon. Lady referred. He stated in it that he intended to introduce proposals that would help

Thirteen months after that action plan was produced, things are getting worse faster. Conservative Members therefore believe that the Bill will be useful, but only at the margins of the crisis.

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